Internet users are unforgiving, and "Congress, enemy of the people" becomes one of the top trending topics on social media.
Governor Tarcísio de Freitas was also criticized.
247 Politicians and internet users took to social media to publish harsh criticism of members of the National Congress, who overturned Provisional Measure 1303. This provisional measure would have changed the taxation on investments. On social media platform X, the expression "Congress, enemy of the people" became one of the most discussed topics.
Federal Deputy Talíria Petrone (Psol-RJ) expressed her indignation against the governor of São Paulo, Tarcísio de Freitas (Republicanos). “Led by Tarcísio de Freitas, who prefers to anticipate his election campaign instead of governing São Paulo, the far right and part of the Centrão are trying to take billions from the budget earmarked for social policies. And, once again, he chooses to side with the banks, the betting companies, the fintechs, and big capital,” wrote the congresswoman.
Federal deputy Rogério Correia (PT-MG) also spoke out. "For them, it's the poor worker who has to pay taxes." There were 251 votes to overturn the measure against 193 to keep it on the agenda for voting.
Check out the reactions below:
The provisional measure that alters the taxation on investments has undergone significant modifications, including the maintenance of exemptions for certain securities and the withdrawal of proposals regarding sports betting.
Provisional Measure (MP) 1303, which deals with the taxation of investment income in Brazil, recently passed through the Joint Committee of the National Congress. The proposal alters how various types of investments will be taxed, including stocks, investment funds, crypto assets, and derivatives. Furthermore, it establishes specific income tax rates for individuals, legal entities, and foreign investors.
The report by Congressman Carlos Zarattini (PT-SP) brought important modifications to the original text. Among the changes, the most notable is the maintenance of tax exemptions on securities such as Real Estate Credit Notes (LCI) and Agribusiness Credit Notes (LCA), as well as the exclusion of the tax increase on sports betting, initially foreseen in the original version of the Provisional Measure.
Finance Minister Fernando Haddad estimated that the measure could generate revenue exceeding R$ 17 billion in 2026. This amount is lower than the initial forecast, which projected R$ 20 billion for next year. According to Haddad, new calculations will be made considering the changes to the proposal's text. The revenue estimate until 2027 has fallen from R$ 35 billion to R$ 20,8 billion, with a projection of R$ 50 billion until 2028.
Changes in sports betting and repatriation of funds.
The withdrawal of the proposal to increase taxation on sports betting is one of the most notable changes in the final report of Provisional Measure 1303. Originally, the measure provided for the taxation of bets with rates between 12% and 18% on the gross revenue from regulated bets. The decision to exclude this tax increase was seen as an attempt to compensate for the loss of revenue caused by the repeal of the increase in the Tax on Financial Operations (IOF), which was rejected by Congress earlier this year.
One of the alternative proposals includes the creation of a repatriation program, which seeks to regularize funds sent abroad, with a 15% tax and an additional 15% fine. The expected revenue from this measure is approximately R$ 5 billion, equivalent to three years' revenue if the tax increase on betting were implemented.
Exemption maintained for LCI and LCA.
Among the modifications in the latest report, the most notable is the maintenance of tax exemptions on Real Estate Credit Notes (LCI) and Agribusiness Credit Notes (LCA). The previous version of Provisional Measure 1303 stipulated a 5% tax rate on the income from these investments. However, the rapporteur revised his position and completely excluded taxation on these securities, maintaining the current exemptions for investors.
Changes in investment funds and fintechs
Regarding investment funds, the rapporteur also adjusted the proposal. Real estate investment funds (FIIs) and funds focused on agribusiness (Fiagro) will continue to have exemptions on capital gains and income related to real estate, while financial investments will continue to be taxed. The proposal to increase the Social Contribution on Net Profit (CSLL) for payment institutions, such as fintechs, was maintained. With this change, these companies will see their tax rate increase from 9% to 15%, bringing them into line with banks in terms of taxation.
Revisions to unemployment insurance during the closed season and new rules for ETFs.
The final report also revised the rules for the fishing ban insurance. The requirement for a National Identity Card (CIN) for artisanal fishermen was removed, being replaced by the need to present a document with biometrics and registration in the Single Registry (CadÚnico). In addition, the requirement for geolocation data of the beneficiary to access the benefit was eliminated.
Another important adjustment was made to the rules for fixed-income index funds (ETFs). The differentiated tax rate for portfolios composed of tax-exempt assets will now be the same as that of the underlying assets. Furthermore, the minimum percentage of tax-exempt assets in the benchmark index was increased from 75% to 90%.
Understanding Letters of Credit: LCI, LCA, and LCD
Real Estate Credit Notes (LCI) and Agribusiness Credit Notes (LCA) are fixed-income securities issued by financial institutions, exempt from income tax for the investor. The main difference between the two is the type of collateral that guarantees the security. While LCIs are linked to the real estate sector, LCAs are backed by credits linked to agribusiness, such as financing and loans to rural producers.
Development Credit Notes (LCDs), created in 2024, are focused on sustainable projects and are issued exclusively by development banks. The proposed taxation in Provisional Measure 1303, which originally would have affected these securities, was revised to ensure that the exemption is maintained, especially for LCIs and LCAs.
These changes reflect a government attempt to balance revenue without overburdening sectors that have historically been incentivized, such as the real estate market and agribusiness. At the same time, the modifications seek to ensure that taxation on new investments, such as fintechs and sports betting, is fairer and more efficient.
